Letter from the Chairman of the Management Board

To the Stakeholders of Bank Pocztowy S.A.,

I would like to encourage you to read the Annual Report of the Bank Pocztowy S.A. Capital Group, summarizing our business activities in 2013, the year of record high operating income and second highest net profit generated by the Group ever.

Operating income of the Group reached PLN 294.3 million and was by 1.4% higher than in 2012. The net profit of PLN 36 million was the second highest result in 24 years of our operations. At the same time, in the last 12 months the Bank Pocztowy S.A. Capital Group followed its strict cost control policy, which resulted in a Cost/Income ratio decrease to 71.3%.

The Group had established very ambitious goals for 2013. Therefore, it should be stressed that it managed to generate so high performance despite unfavorable market environment and no additional financing. Eventually, the Bank acquired nearly 300 thousand new clients. At the end of 2013 the number of consumers and microenterprises using our services reached 1.4 million, i.e. by 130 thousand more than in 2012. At the end of 2013 the Group managed 840 thousand current accounts, i.e. 113 thousand more than in the previous year.

The balance sheet total of the Group grew by 3.7% year-on-year up to PLN 7.4 billion. The Group also increased the amount of originated loans and advances, which reached PLN 5.2 billion (versus PLN 4.7 billion year-on-year). At the end of December the volume of deposits stood at PLN 6.2 billion (as compared to PLN 6.3 billion in 2012). Following the strategy of further diversification of sources of financing operations, in 2013 we successfully completed a bond issue covering ordinary bonds of PLN 147.85 million and three issues of short-term bonds with the total value of PLN 140 million.

The Group also insisted on maintaining Capital Adequacy Ratio at the level higher than required by the Polish Financial Supervision Authority. At the end of December 2013 CAR amounted to 12.8%, while the Tier 1 capital ratio stood at 9.5%.

Last year, we also continued dynamic development of the sales network. At the end of the year the Bank managed a network of 295 own sales points and Micro-branches. Pursuing our goal of establishing a network of 1,000 outlets providing financial services, we opened 68 Micro-branches, while our strategic partner and stakeholder, Poczta Polska S.A., launched 260 Postal Financial Zones by the end of 2013.

Our business model implemented was highly appreciated by market experts and Bank Pocztowy was awarded for various areas of its operations. Three awards were granted to the Bank in the Fifth edition of the Banking Forum - the Fastest Growing Bank, Best Bank in small and medium banks category and Manager of the Year – an award for the Chairman of the Management Board of the Bank. The Bank also focuses on establishing top quality market communication, having implemented reporting standards similar to those applied by listed banks. Therefore, we are very proud of the award for the best report on the activities of the company in the banks and financial institutions category, granted in the October 2013 in the Eight edition of The Best Annual Report competition.

In 2014 we will follow the development model reinforcing sustainable profitability of Bank Pocztowy. We intend to generate at least 10% ROE (net) and to control operating expenses, which will further improve the cost to income relation. Our activities will grow the Bank’s value for its stakeholders and foster organic growth in our demanding market. We will still work towards increasing capital of the Bank through an IPO or capital injection by the existing shareholders. These steps, however, will be possible in an advantageous market environment and after obtaining the shareholders’ approval.

I would like to thank all our clients for yet another year of your confidence in Bank Pocztowy and I do encourage you to actively use our simple and easily accessible banking services.

Best regards,

Tomasz Bogus
Chairman of the Management Board of Bank Pocztowy S.A.